Correlation Between Bagger Daves and El Pollo
Can any of the company-specific risk be diversified away by investing in both Bagger Daves and El Pollo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bagger Daves and El Pollo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bagger Daves Burger and El Pollo Loco, you can compare the effects of market volatilities on Bagger Daves and El Pollo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bagger Daves with a short position of El Pollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and El Pollo.
Diversification Opportunities for Bagger Daves and El Pollo
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bagger and LOCO is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and El Pollo Loco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on El Pollo Loco and Bagger Daves is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bagger Daves Burger are associated (or correlated) with El Pollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of El Pollo Loco has no effect on the direction of Bagger Daves i.e., Bagger Daves and El Pollo go up and down completely randomly.
Pair Corralation between Bagger Daves and El Pollo
Given the investment horizon of 90 days Bagger Daves Burger is expected to generate 3.38 times more return on investment than El Pollo. However, Bagger Daves is 3.38 times more volatile than El Pollo Loco. It trades about 0.05 of its potential returns per unit of risk. El Pollo Loco is currently generating about 0.08 per unit of risk. If you would invest 5.45 in Bagger Daves Burger on August 24, 2024 and sell it today you would earn a total of 1.55 from holding Bagger Daves Burger or generate 28.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bagger Daves Burger vs. El Pollo Loco
Performance |
| Timeline |
| Bagger Daves Burger |
| El Pollo Loco |
Bagger Daves and El Pollo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bagger Daves and El Pollo
The main advantage of trading using opposite Bagger Daves and El Pollo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bagger Daves position performs unexpectedly, El Pollo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in El Pollo will offset losses from the drop in El Pollo's long position.| Bagger Daves vs. Alsea SAB de | Bagger Daves vs. Marstons PLC | Bagger Daves vs. Marstons PLC | Bagger Daves vs. Spot Coffee |
| El Pollo vs. FAT Brands | El Pollo vs. Potbelly Co | El Pollo vs. BJs Restaurants | El Pollo vs. One Group Hospitality |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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